Sebi orders impounding Rs 3.6 cr from 4 entities in insider trading case

Markets regulator Sebi has ordered impounding of wrongful gains worth Rs 3.6 crore from four entities related to a case of insider trading in the shares of Infibeam Avenues Ltd.

In the order, Sebi saidRs 2.61 crore will be impounded, jointly and severally, from Dhiren Mahendrakumar Shah HUF, Amee Dhiren Shah and Affluence Fincon Service. Besides, Rs 97.36 lakh will be impounded fromInfinium Motors (Gujarat) Pvt Ltd (IMGPL), a group firm of Infibeam Avenues.

An investigation was conducted into shares of Infibeam Avenues Ltd (IAL) for the November, 2016 to June, 2017 period to ascertain whether certain entities had traded in the scrips while in possession of Unpublished Price Sensitive Information (UPSI).

Trading in shares of a company while in possession of UPSI of the same violates provisions of the PIT (Prohibition of Insider Trading) Regulations.

During the investigation, Sebi found that the four entities made wrongful gains by trading in the scrip ofIAL while in possession of UPSI pertaining to stock split.

It is prima facie established that Vishal Mehta,who is a promoter and also the managing director of Infibeam Avenues, had passed on UPSI to Malav Mehta, who had traded in the scrip on behalf of IMGPL, Sebi said in an order passed on Monday.

Vishal Mehta is alsobrother of MalavMehta, adirector in IMGPL and authorised to trade on behalf of IMGPL.

Sebi also said that Dhiren Mahendrakumar Shah (HUF), Amee Dhiren Shah and Affluence Fincon Service together called Dhiren Group are "connected persons" who were reasonably expected to have access to the UPSI.

A significant amount of Rs 50 crore had been invested by the Dhiren Group inIAL through a pre-IPO preferential allotment. This coupled with Affluence acting as the stock broker for IMGPL's trades in IAL leads to a prima facie inference that Dhiren Group was connected to the promoters or directors of IAL and had access to the UPSI, as per the order.

Therefore, the trading in the scrip by IMGPL and Dhiren Group is prima facie in violation of the insider trading norms, the Securities and Exchange Board of India (Sebi) noted.

In a separate order, the regulator has imposed a penalty of Rs 5 lakh on MCS Share Transfer Agent Ltd for failing to provide documents required by the auditors appointed by Sebi.